Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
XXXXXXXXXX
Attention: XXXXXXXXXX
Dear Sirs:
This is in reply to your letter dated December 23, 1992, wherein you requested our opinion on the deferral of builders' marketing costs in accordance with generally accepted accounting principles ("GAAP") as required by paragraph 3 of Interpretation Bulletin IT-417R.
In answer to your question, IT-417R represents Revenue Canada's current position on the matter of prepaid expenses and deferred charges.
In our opinion, builders' marketing costs referred to in your letter should be deferred for tax purposes as they are for financial statements in accordance with GAAP. This position is supported by recent Court decisions, namely West Kootenay Power and Light Co. v. H.M.Q., 92 DTC 6023, where Mr. Justice MacGuigan, speaking for the Federal Court of Appeal, said:
...The approved principle is that whichever method presents the "truer picture" of a taxpayer's revenue, which more fairly and accurately portrays income, and which "matches" revenue and expenditure, if one method does, is the one that must be followed.
We trust that our comments will be of some assistance.
Yours truly,
for Director Manufacturing Industries, Partnerships and Trusts DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1993
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© Sa Majesté la Reine du Chef du Canada, 1993
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